For Mr Michael Stainer things have gone from bad to worse. The Director of The Grand Folkestone (Mr Stainer is not the owner according to Companies House) has made things worse for himself as we said. Why so?
On the 11 June 2015 Sitting in public at the Royal Courts of Justice, the Strand, London JUDGE Rachel Short sitting in the First Tier Tribunal Tax Chamber heard the case of Michael and Doris Stainer and their companies, Grand UK Limited, Keppels Limited, Keppels Cuisine Limited, Kentish Cuisine Limited,The Grand Folkestone Limited, Kentish Estates Limited (with a combined debt of over one and quarter million pounds) – V – HMRC. ( UKFTT 138 (TC)
Well on the 25/02/16 Judge Short handed down her verdict. Well, do our best to summarise this for you.
“Michael Stainer, a chartered accountant, and his wife continued the perpetuation of the myth that they have owned The Grand Hotel in Folkestone for 40 years. The Stainers were arrested in July last year after failing to account for income tax through PAYE and NICs from 2006 to 2011. July 2015
During this period the Grand was run through six companies and the partnership of the Stainers who were also the director and or company secretary of each of the six companies.
In each year 100 employees worked at the Grand, all of 30 of their employment contracts were in the name of ‘The Grand’ and did not stipulate which of the six companies operating at the Grand or the partnership they were employed by.
HMRC was particularly critical in its assessment of Stainer, arguing that he was an accountant and “should have been familiar with the PAYE process”. The judge agreed, stating: “Failing to account for PAYE and NI and make returns for someone in Mr Stainer’s position was careless and so the extended period for assessment under s 36 TMA 30 1970 should apply”.
The tax geared penalties for the 2006-7 and 2007-8 periods imposed on Stainer had been abated to 40% to take his co-operation with HMRC into account.
Stainer’s representative argued that penalties should be abated further for co-operation. The judge was not impressed by the argument: “Our view is that Mr Stainer has co-operated no more than he has been legally obliged to with HMRC’s enquiry, forcing HMRC to issue information notices to obtain even the basic information on which they have 35 based these assessments. To get the necessary information HMRC had to raid The Grand
“For this reason we have concluded that this aspect of the penalty determination should be increased, reducing the level of mitigation for cooperation to 10%.”
Stainer’s attempts at reasonable excuse were also shot down by the tribunal. In correspondence with the Revenue, Stainer said that he lacked the ability to pay. (Now do remember the companies have a combined debt of over £1 point 25million. ) Again, the judge disagreed, “[I]t is generally accepted that lack of ability to pay does not amount to a reasonable excuse unless the reason for a lack of funds would itself amount to such an excuse.
“Mr Stainer did not provide any evidence that the appellants’ lack of funds arose from any exceptional or unexpected circumstances which might form the basis of such a reasonable excuse.”
Stainer also said that his preoccupation with his day job at Eurotunnel and issues with the local council distracted him. This drew a stern reprimand from the judge, “We have to consider whether a reasonably prudent businessman in his position would have behaved as he did throughout this period and failed to make any returns or payments of PAYE or NI.
“We do not accept that the persistent and ongoing failures by the appellants to make any such returns or payments can be excused by Mr Stainer’s preoccupation with other issues.””
So in short The first tier tribunal delivered a nasty sting to the tax case appellant Mr Stainer, confirming and even increasing the fines initially imposed by HMRC.
Now we have some questions of our own
Does anyone know if Mr Stainer works for Eurotunnel, or has Mr Stainer misinformed Judge Short?
How could Mr Stainer afford to renovate the Grand with the debts he has?
Would it be wise and prudent to do business with these companies and Mr Stainer, as the companies and he appear to be in substantial Debt?
Why were the Council, SDC distracting him, were they chasing him for unpaid bills too?
And in Nov 14 Mr Stainer received the news from the Council with assistance from former Cllr Tillson that his new Luxury Suites could go ahead. How will he afford these new suites when he is clearly so much in debt? The Grand Manger Robert Richardson makes clear in the article below, refurbishment will cost £800,000. And was this the distraction from the council he was referring to in his case?